We analyze an overlapping generations model in which pollution arises, in an accumulatively way, from production. Householders do not care directly about the environment, but pollution leads them to incur health costs when they are elderly. We show that the presence of pollution means that the economy more likely to be dynamically inefficient. For these cases we analyze two kinds of tax scheme: one based on production taxes and the other based on capital and wage taxes. We show how to design both schemes to put the economy into the golden rule allocation. We also show that under the production tax scheme young and elderly agents pay less taxes (or receive more transfers) than under the production tax system.

The purpose of this article is to assess the effectiveness of the collaboration between stakeholders and scientists in the construction of a bio-economic model to simulate management strategies for the fisheries in Iberian Atlantic waters. For 3 years, different stakeholders were involved in a model development study, participating in meetings, surveys and workshops. Participatory modelling involved the definition of objectives and priorities of stakeholders, a qualitative evaluation and validation of the model for use by decision-makers, and an iterative process with the fishing sector to interpret results and introduce new scenarios for numerical simulation. The results showed that the objectives of the participating stakeholders differed. Incorporating objectives into the design of the model and prioritizing them was a challenging task. We showed that the parameterization of the model and the analysis of the scenarios results could be improved by the fishers’ input: e.g. ray and skate stocks were explicitly included in the model; and the behaviour of fleet dynamics proved much more complex than assumed in any traditional modelling approach. Overall, this study demonstrated that stakeholder engagement through dialogue and many interactions was beneficial for both, scientists and the fishing industry. The researchers obtained a final refined model and the fishing industry benefited from participating in a process, which enables them to influence decisions that may affect them directly (to shape) whereas non-participatory processes lead to management strategies being imposed on stakeholders (to be shaped).

Da Rocha, J-M., Gutiérrez, M-J., and Cerviño, S. 2012. Reference points based on dynamic optimization: a versatile algorithm for mixed-fishery management with bioeconomic age-structured models. – ICES Journal of Marine Science, 69: 660–669. Single-species management objectives may not be consistent within mixed fisheries. They may lead species to unsafe situations, promote discarding of over-quota, and/or misreporting of catches. We provide an algorithm for characterizing bioeconomic reference points for a mixed fishery as the steady-state solution of a dynamic optimal management problem. The optimization problem takes into account that: (i) species are caught simultaneously in unselective fishing operations, and (ii) intertemporal discounting and fleet costs relate to reference points to discounted economic profits along optimal trajectories. We illustrate how the algorithm can be implemented by applying it to the European northern hake stock (Merluccius merluccius), where fleets also capture northern megrim (Lepidorhombus whiffiagonis) and northern anglerfish (Lophius piscatorius and Lophius budegassa). We find that optimal mixed management leads to a target reference point that is quite similar to two-thirds of the Fmsy single-species (hake) target. Mixed management is superior to single-species management because it leads the fishery to higher discounted profits, with higher long-term spawning-stock biomass for all species. We calculate that the losses due to the use of the Fmsy single-species (hake) target in this mixed fishery account for 11.4% of total discounted profits.

Feasibility of positive steady-state growth in overlapping generation (OLG) economies that use non-renewable resources as essential inputs in the production process is analyzed. The model we use is, in essence, that of Diamond (Amer. Econ. Rev. 55 (1965) 1126–1150) with non-renewable resources and exogenous technological progress. The main finding is that having a high enough labor share is a necessary condition for the economy to exhibit positive steady-state growth rate. This condition does not need to be satisfied in infinitely-lived agent economies. The reason is that although technological progress is introduced exogenously, in the OLG economy, the growth rate of the economy depends among others on capital accumulation, which requires savings paid out of wage income. We also show that the unique balanced growth path is efficient in the Pareto sense, as expected.